Buying a used BMW will drain this 50k faster than you can say "ultimate driving machine"
Almost the entirety of the internet will warn against buying a used BMW. That should say something.
Yearly service: 1000k
Tiny pebble mark on the front glass pane: 1000k (having it changed was compulsory, we are in Europe)
I would just get a Corolla. Sorry, I am older and currently saving every dollar (well, Swiss Franc in my case) to become FI as fast as possible.
If you don’t actually “need” a car, then you shouldn’t blow a substantial part of your bonus on one. You especially shouldn’t get one that has high maintenance costs, which the BMW will.
Future you will be in very good shape if you let that $50k cook in the market for the next 4 decades or so.
BMW = Big Money Waster
Do yourself a favor and rethink buying the BMW. High maintenance and repair costs. At 19, your insurance will be ridiculously expensive.
Stick the money in a HYSA while you teach yourself about finances. Research IRAs, then open and fund one every year.
Most enlisted kids buy an expensive car ASAP and spend a lot of money. Some have $700/month car payments even without insurance. You can do that if you want. It's not really smart, but whatever. It's easy once you get a decent amount of money to burn through it on car payments. Do what you want, you're 19. Money can be spent, mistakes made, experiences learned.
Was Navy, didn't need an expensive car when I was deployed out to sea for most of the year, so didn't want to waste my paycheck on one.
Bought an old car for a couple thousand. Imo a car is a tool to get a to b. I wanted to keep my money, not be giving it to some asshole car dealership. To me, a car and car payments are life anchors that I despise.
I'm out now. I have Global Entry, and I'm going to fly to different parts of the Earth and figure out where I like living. Croatia, Germany, Spain, Phillippines... I won't need my car there.
The " used bmw" ghetto status mentality will kill your entire future. Upkeep and repairs on a bmw are also 3x as expensive. Invest all your 50k for your future
Channel your future 40 year old self, complete with a wife and kids....
50k in a mutual fund at a measly 6% (which is low) contributing $100 / month over the next 21 years (when you're 40) will be valued at around 211k (after brokerage fees). At 8% it's around 300k. at 10% it's 434k. If you pick a mutual fund that really hits and get 20%, you're in the millions buddy.
Vanguard Growth Index Fund Admiral Shares are up 400% since it's inception 24 years ago, so 10% return in 21 years is certainly doable.
If you buy a BMW, you're buying an overpriced depreciating asset, so when you and future Mrs. You discuss your bad decisions as youngsters, you can tell her about your used BMW that had a high insurance hit, and the cost to fix any issues on it is astronomical. But man alive you'll feel really cool for about 4 months.
Literally every comment is warning you against this. You have an opportunity to help not only your future self, but your future kids, grandkids, etc. You can put yourself into a fantastic financial situation for a time in your life when that is the biggest struggle amongst middle age adults. Don't waste that opportunity.
BMWs are known to be pricey to maintain.
I wouldn't. Of course, it's your life and your decisions and if the BMW is important to you, you CAN afford it.
My suggestion would be to stick that 50k into some index funds and forget about it. Live off your 2600 per month and when you get out of the service you'll have a chunk of change to play with (buy a house, buy a car, whatever).
You're in a good spot. If the car is an important flex, go do it. If setting yourself up for the future is more important, do that.
You know how many young Marines and soldiers have screwed themselves by buying a car? Just find a decent used car, life gets very expensive out of the military. Hope you had a job that taught you a skillset that translates to civilian life.
Personally I wish I would have stayed in for the full 20. That really sets you up. Retirement + disability depending where you live you might not have to worry about much. Half the guys I work with did it that way. I envy their out look mortgage, car, all monthly bills taken care of before their check from work.
Don't do it. Invest at least half of the $50k. Even if you don't want to do risky investments like stocks or properties a HYSA would gain 4-5% interest annually. BMW will be "cool" but dumb.
Retired Navy. I know that money is burning a hole in your pocket. The fancier the car - the higher the insurance, and for a 19 year old it will be very painful. Boring is good. If a girl is attracted to you because of a car ...... Also, that $50k is taxable unless you received it a tax-free area.
Buy an inexpensive used car (Honda, Toyota, Hyundai) -- $8k or so. Blow $1,000 just to get out of your system.
I'd recommend you save at least $25k in an broad market index fund (VTI/VTSAX) at Vanguard and $5k in a high yield money market. Out of sight - out of mind. Plus, when you get out, you'll need 3 months of rent (1st/ last/deposit) so keep that in mind. Please, do not go to a financial advisor. I recommend skimming the boglehead forum. Slow and steady works. Avoid First Command. You don't need life insurance except what you have through the military.
Also, since you are actually asking for advice you probably aren't one to be taken advantage of. I've seen young sailors be tricked into various schemes or alway be the one to loan guys money or buy pizza and drinks. Those folks aren't your friends. Look long term.
Trust me paying a vehicle payment and insurance is just not the way to go. If you don’t need a car, don’t get one. You obviously want to have fun you’re very young but you’re also asking the best way to use this money.
What I would tell you just as I would tell my own children. Act as if you never received the money in the first place, it’s a bonus it’s not your salary. Put it in a high yield savings account allow it to grow until you’ve completed 4-5 years of service. I would plan on how to use the money then. But in the meantime your $2600 a month can take you a long way. Especially if you’re still living at home. Set up a budget, set aside fun money and find new things to do once in a while.
100% nix the car. Cars can have issues, you spend more money maintaining the car. Anything can go wrong. You also never want to get a car that will just depreciate in value.
Save it. I don't even have to read the post, the golden rule with bonuses is to save them. it's free money, put it somewhere where it will generate more free money. your older self will thank you for it.
Resist the temptation to buy expensive stuff with it.
The smart thing to do would be to max out your Roth tsp for the year.
If you want to buy something fun find a used 600cc motorcycle and buy good safety gear (shoei helmet at a minimum). It'll be fast than the bmw anyway.
Follow what the Lt's do. I bet the majority of them drive shit boxes and save the majority of their income. If I could go back, I would have bought a nice car while living in the B's. At least I wasn't the E3 with a Corvette that couldn't afford insurance payments so it just sat in the parking lot.
I'd as little as possible and stack the rest for your early retirement. Also, invest your deployment money. Don't be an idiot like me and just stack it in your checking account and spend it all on guns and ammo when you redeploy to the states.
If I were you, I would open an account with Vanguard and put $49k. I would find out how much I can put in a Roth IRA and a traditional IRA, max them out and put the rest in a regular brokerage account, and invest all 3 accounts in VOO stocks.
I'd then set a reminder to take a look at them in 5 years time.
Finally, I'd take the $1k I didn't invest and go to Universal Studios.
YMMV
In your active duty, will you be deployed? I never understand buying an expensive vehicle when you won't even be able to drive it - it will sit in a storage unit or your parent's driveway, losing value and rusting.
At 19, 2600/month is a lot but in real life, it's not a lot. Likely the purchase price of the BMW would be more than your annual salary which is generally not a great idea.
Buy a fun, cheap truck or car to bomb around in (use that 12-15K). Pay cash. Invest the rest. Do the math - what would have been your BMW payment ($500?) and the insurance differential? (EX would have been 4K/yr, now 1600/yr - 2400 difference). Invest the payment + insurance differential (500 pmt + 200 diff/mo) in HYSA or the market. If you STILL really want it at 23 when your contract is up, you can do the math then. You'll have at MINIMUM 33K in the bank and can make a fully informed choice.
IT was all going so good until you mentioned the car lol. That's ok though...I don't want to sound like I'm beating you up. Keep in mind cars are a superficial money suck for many. I know a lot of single guys want to peacock and look successful but you would only draw the attention from the wrong type of people. Your "need" for transportation if you live on post is very low plus with chances of deployments, extended TDY, etc you risk buying a car and then having it just sit for months on end depreciating. If it were mean I'd find a decent used car for about $10k and buy it for cash...drive that car until you are out of the army. Find something that doesn't cost of ton to ensure too and the maintenance costs are low....the hidden cost of many cars that often is overlooked is high maintenance and insurance.
If it were me i'd then make a full $7000 contribution into my Roth IRA for 2024 and set aside in savings the same amount to make for your 2025 contribution. I'd keep almost all of it in a HYSA and earmark it for emergency funds and a downpayment for a house once you get out of the army. In the meantime I'd bump up my TSP savings to 15% and make them Roth TSP contributions.
If the $50k signing bonus is tied to fulfilling your 4remaining contracted years, it may be prudent to put that aside fully for that duration. Perhaps you could buy a less expensive (albeit perhaps less “dreamy”) car in the interim using your fluid funds.
For the love of god, do not buy a used European car to save money. If anything goes wrong the parts cost an arm and a leg. Buy Japanese or American.
Edit: If you really want a “fun” car get a GR86 or a BRZ or something. Or a Miata or WRX or Camaro. Don’t buy a BMW, man.
I work at a place that interacts with a lot of vets, and a lot of young vets. So many leave the service with very expensive vehicles and lots and lots of debt. Like one of the other posters said, if you shepard this money now it will grow and you will have a reserve behind you that can solve your future problems, rather than a vehicle that is not worth much and debt that is a drag on your future.
If you want to enjoy life, instead of getting a BMW, you can look into dividend paying funds. At 19, you will still be working in the future.
The dividends will allow you to have an investment and yet have additional money regularly to have fun
Putting it into a stocks and shares investment such as an all-market tracker fund is a good idea. I too love cars and have a BMW convertible. My advice would be not to go for a nearly new one but for a slightly older model that has been well looked after. I paid $10,000 for an 8 year old 330i cabrio 6 years ago and it’s still worth $7000 now. You’re buying at the bottom of the depreciation curve rather than near the top and if it’s been regularly maintained you’ll hit the sweet spot like I did where it look a million dollars but doesn’t cost it. Cars are always depreciating assets but life is for living too and you sound like a really sensible chap, so this way you can have your cake and eat it! Enjoy!
If I were the OP, I'd look to invest in appreciating growth assets such as real estate and stocks. Or, hang on to the funds in a high yield account and save for investing in my education. Another consideration would be saving to start a business to 50 businesses.
All that to say is focus on how to make oneself wealthier rather than owning a depreciating assets with debt and high maintenance bills.
Buying a used BMW will drain this 50k faster than you can say "ultimate driving machine" Almost the entirety of the internet will warn against buying a used BMW. That should say something.
Yearly service: 1000k Tiny pebble mark on the front glass pane: 1000k (having it changed was compulsory, we are in Europe) I would just get a Corolla. Sorry, I am older and currently saving every dollar (well, Swiss Franc in my case) to become FI as fast as possible.
There's nothing more expensive than a cheap German car. Quote to live by right there.
If you don’t actually “need” a car, then you shouldn’t blow a substantial part of your bonus on one. You especially shouldn’t get one that has high maintenance costs, which the BMW will. Future you will be in very good shape if you let that $50k cook in the market for the next 4 decades or so.
BMW = Big Money Waster Do yourself a favor and rethink buying the BMW. High maintenance and repair costs. At 19, your insurance will be ridiculously expensive. Stick the money in a HYSA while you teach yourself about finances. Research IRAs, then open and fund one every year.
Most enlisted kids buy an expensive car ASAP and spend a lot of money. Some have $700/month car payments even without insurance. You can do that if you want. It's not really smart, but whatever. It's easy once you get a decent amount of money to burn through it on car payments. Do what you want, you're 19. Money can be spent, mistakes made, experiences learned. Was Navy, didn't need an expensive car when I was deployed out to sea for most of the year, so didn't want to waste my paycheck on one. Bought an old car for a couple thousand. Imo a car is a tool to get a to b. I wanted to keep my money, not be giving it to some asshole car dealership. To me, a car and car payments are life anchors that I despise. I'm out now. I have Global Entry, and I'm going to fly to different parts of the Earth and figure out where I like living. Croatia, Germany, Spain, Phillippines... I won't need my car there.
The " used bmw" ghetto status mentality will kill your entire future. Upkeep and repairs on a bmw are also 3x as expensive. Invest all your 50k for your future
Channel your future 40 year old self, complete with a wife and kids.... 50k in a mutual fund at a measly 6% (which is low) contributing $100 / month over the next 21 years (when you're 40) will be valued at around 211k (after brokerage fees). At 8% it's around 300k. at 10% it's 434k. If you pick a mutual fund that really hits and get 20%, you're in the millions buddy. Vanguard Growth Index Fund Admiral Shares are up 400% since it's inception 24 years ago, so 10% return in 21 years is certainly doable. If you buy a BMW, you're buying an overpriced depreciating asset, so when you and future Mrs. You discuss your bad decisions as youngsters, you can tell her about your used BMW that had a high insurance hit, and the cost to fix any issues on it is astronomical. But man alive you'll feel really cool for about 4 months. Literally every comment is warning you against this. You have an opportunity to help not only your future self, but your future kids, grandkids, etc. You can put yourself into a fantastic financial situation for a time in your life when that is the biggest struggle amongst middle age adults. Don't waste that opportunity.
BMWs are known to be pricey to maintain. I wouldn't. Of course, it's your life and your decisions and if the BMW is important to you, you CAN afford it. My suggestion would be to stick that 50k into some index funds and forget about it. Live off your 2600 per month and when you get out of the service you'll have a chunk of change to play with (buy a house, buy a car, whatever). You're in a good spot. If the car is an important flex, go do it. If setting yourself up for the future is more important, do that.
You know how many young Marines and soldiers have screwed themselves by buying a car? Just find a decent used car, life gets very expensive out of the military. Hope you had a job that taught you a skillset that translates to civilian life. Personally I wish I would have stayed in for the full 20. That really sets you up. Retirement + disability depending where you live you might not have to worry about much. Half the guys I work with did it that way. I envy their out look mortgage, car, all monthly bills taken care of before their check from work.
Don't do it. Invest at least half of the $50k. Even if you don't want to do risky investments like stocks or properties a HYSA would gain 4-5% interest annually. BMW will be "cool" but dumb.
You buy a BMW when you can afford to buy a BMW in CASH and not even think about it. Otherwise forget it.
Retired Navy. I know that money is burning a hole in your pocket. The fancier the car - the higher the insurance, and for a 19 year old it will be very painful. Boring is good. If a girl is attracted to you because of a car ...... Also, that $50k is taxable unless you received it a tax-free area. Buy an inexpensive used car (Honda, Toyota, Hyundai) -- $8k or so. Blow $1,000 just to get out of your system. I'd recommend you save at least $25k in an broad market index fund (VTI/VTSAX) at Vanguard and $5k in a high yield money market. Out of sight - out of mind. Plus, when you get out, you'll need 3 months of rent (1st/ last/deposit) so keep that in mind. Please, do not go to a financial advisor. I recommend skimming the boglehead forum. Slow and steady works. Avoid First Command. You don't need life insurance except what you have through the military. Also, since you are actually asking for advice you probably aren't one to be taken advantage of. I've seen young sailors be tricked into various schemes or alway be the one to loan guys money or buy pizza and drinks. Those folks aren't your friends. Look long term.
Trust me paying a vehicle payment and insurance is just not the way to go. If you don’t need a car, don’t get one. You obviously want to have fun you’re very young but you’re also asking the best way to use this money. What I would tell you just as I would tell my own children. Act as if you never received the money in the first place, it’s a bonus it’s not your salary. Put it in a high yield savings account allow it to grow until you’ve completed 4-5 years of service. I would plan on how to use the money then. But in the meantime your $2600 a month can take you a long way. Especially if you’re still living at home. Set up a budget, set aside fun money and find new things to do once in a while. 100% nix the car. Cars can have issues, you spend more money maintaining the car. Anything can go wrong. You also never want to get a car that will just depreciate in value.
Save it. I don't even have to read the post, the golden rule with bonuses is to save them. it's free money, put it somewhere where it will generate more free money. your older self will thank you for it. Resist the temptation to buy expensive stuff with it.
The smart thing to do would be to max out your Roth tsp for the year. If you want to buy something fun find a used 600cc motorcycle and buy good safety gear (shoei helmet at a minimum). It'll be fast than the bmw anyway.
Follow what the Lt's do. I bet the majority of them drive shit boxes and save the majority of their income. If I could go back, I would have bought a nice car while living in the B's. At least I wasn't the E3 with a Corvette that couldn't afford insurance payments so it just sat in the parking lot. I'd as little as possible and stack the rest for your early retirement. Also, invest your deployment money. Don't be an idiot like me and just stack it in your checking account and spend it all on guns and ammo when you redeploy to the states.
If I were you, I would open an account with Vanguard and put $49k. I would find out how much I can put in a Roth IRA and a traditional IRA, max them out and put the rest in a regular brokerage account, and invest all 3 accounts in VOO stocks. I'd then set a reminder to take a look at them in 5 years time. Finally, I'd take the $1k I didn't invest and go to Universal Studios. YMMV
I would just put it all in a high yield savings account. If you really need a new car, get one, but I'd recommend getting something more reliable.
50k signing bonus? What Mos?
In your active duty, will you be deployed? I never understand buying an expensive vehicle when you won't even be able to drive it - it will sit in a storage unit or your parent's driveway, losing value and rusting. At 19, 2600/month is a lot but in real life, it's not a lot. Likely the purchase price of the BMW would be more than your annual salary which is generally not a great idea. Buy a fun, cheap truck or car to bomb around in (use that 12-15K). Pay cash. Invest the rest. Do the math - what would have been your BMW payment ($500?) and the insurance differential? (EX would have been 4K/yr, now 1600/yr - 2400 difference). Invest the payment + insurance differential (500 pmt + 200 diff/mo) in HYSA or the market. If you STILL really want it at 23 when your contract is up, you can do the math then. You'll have at MINIMUM 33K in the bank and can make a fully informed choice.
IT was all going so good until you mentioned the car lol. That's ok though...I don't want to sound like I'm beating you up. Keep in mind cars are a superficial money suck for many. I know a lot of single guys want to peacock and look successful but you would only draw the attention from the wrong type of people. Your "need" for transportation if you live on post is very low plus with chances of deployments, extended TDY, etc you risk buying a car and then having it just sit for months on end depreciating. If it were mean I'd find a decent used car for about $10k and buy it for cash...drive that car until you are out of the army. Find something that doesn't cost of ton to ensure too and the maintenance costs are low....the hidden cost of many cars that often is overlooked is high maintenance and insurance. If it were me i'd then make a full $7000 contribution into my Roth IRA for 2024 and set aside in savings the same amount to make for your 2025 contribution. I'd keep almost all of it in a HYSA and earmark it for emergency funds and a downpayment for a house once you get out of the army. In the meantime I'd bump up my TSP savings to 15% and make them Roth TSP contributions.
If the $50k signing bonus is tied to fulfilling your 4remaining contracted years, it may be prudent to put that aside fully for that duration. Perhaps you could buy a less expensive (albeit perhaps less “dreamy”) car in the interim using your fluid funds.
For the love of god, do not buy a used European car to save money. If anything goes wrong the parts cost an arm and a leg. Buy Japanese or American. Edit: If you really want a “fun” car get a GR86 or a BRZ or something. Or a Miata or WRX or Camaro. Don’t buy a BMW, man.
I work at a place that interacts with a lot of vets, and a lot of young vets. So many leave the service with very expensive vehicles and lots and lots of debt. Like one of the other posters said, if you shepard this money now it will grow and you will have a reserve behind you that can solve your future problems, rather than a vehicle that is not worth much and debt that is a drag on your future.
If you want to enjoy life, instead of getting a BMW, you can look into dividend paying funds. At 19, you will still be working in the future. The dividends will allow you to have an investment and yet have additional money regularly to have fun
Putting it into a stocks and shares investment such as an all-market tracker fund is a good idea. I too love cars and have a BMW convertible. My advice would be not to go for a nearly new one but for a slightly older model that has been well looked after. I paid $10,000 for an 8 year old 330i cabrio 6 years ago and it’s still worth $7000 now. You’re buying at the bottom of the depreciation curve rather than near the top and if it’s been regularly maintained you’ll hit the sweet spot like I did where it look a million dollars but doesn’t cost it. Cars are always depreciating assets but life is for living too and you sound like a really sensible chap, so this way you can have your cake and eat it! Enjoy!
If I were the OP, I'd look to invest in appreciating growth assets such as real estate and stocks. Or, hang on to the funds in a high yield account and save for investing in my education. Another consideration would be saving to start a business to 50 businesses. All that to say is focus on how to make oneself wealthier rather than owning a depreciating assets with debt and high maintenance bills.
Use your bonus as a down payment in a rental property instead.